Excess collection as sales tax attracts State penalty; State penalty machinery applies to Central sales tax matters.

A dealer's collection of a 4% surcharge shown in bills against C forms was treated as realisation of Central sales tax, not a mere reimbursement of incidental expenses, because no Central sales tax was legally payable on the transactions. That excess collection therefore fell within the State penalty provision for realising tax as sales tax and attracted penalty under the U.P. Sales Tax Act. The Court also held that, by virtue of section 9(2-A) of the Central Sales Tax Act, the State penalty machinery applied to Central sales tax matters, and the argument that only the Central Act's penalty provisions could operate was rejected. The revision succeeded and the matter was remanded only for quantification of penalty.

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Issues: (i) Whether the dealer's recovery of 4% surcharge on Central sales was realisation of tax as sales tax within section 15-A(1)(qq) of the U.P. Sales Tax Act and attracted penalty when no Central sales tax was legally payable. (ii) Whether the penal provisions of the U.P. Sales Tax Act could be applied to Central sales by virtue of section 9(2-A) of the Central Sales Tax Act.

Issue (i): Whether the dealer's recovery of 4% surcharge on Central sales was realisation of tax as sales tax within section 15-A(1)(qq) of the U.P. Sales Tax Act and attracted penalty when no Central sales tax was legally payable.

Analysis: The bills specifically showed recovery of 4% against form C, and the finding recorded was that the amount was realised as Central sales tax and not as mere reimbursement of freight, packing, insurance or similar expenses. Since no Central sales tax was leviable on the transactions in view of the forms furnished, the amount collected was an excess realisation as tax. The statutory requirement is satisfied where an amount is realised as sales tax despite no tax being legally payable.

Conclusion: The issue was decided against the assessee and in favour of the Revenue. The collection of 4% surcharge was held to be realisation of Central sales tax and attracted section 15-A(1)(qq).

Issue (ii): Whether the penal provisions of the U.P. Sales Tax Act could be applied to Central sales by virtue of section 9(2-A) of the Central Sales Tax Act.

Analysis: The Court relied on the Supreme Court's exposition that, by reason of section 9(2-A), the penalty machinery of the State sales tax law is available for enforcing liabilities connected with Central sales tax. The contention that only sections 10 and 10-A of the Central Sales Tax Act could be invoked was rejected as contrary to binding precedent.

Conclusion: The issue was decided against the assessee and in favour of the Revenue. The State penalty provision was held applicable to Central sales tax matters.

Final Conclusion: The revision succeeded, the Tribunal's order was set aside, and the matter was sent back only for determination of the quantum of penalty.

Ratio Decidendi: Where a dealer realises an amount as sales tax though no tax is legally payable, the collection attracts penalty under the State law, and by virtue of section 9(2-A) of the Central Sales Tax Act the State penalty machinery can be applied to Central sales tax matters.

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